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Funds Management

How Pension funds performed in 2019

Pension funds in Nigeria recorded impressive performances in 2019. The Retirement Savings Account, RSA, category made an average of 13%, with returns ranging from 19.38% to 6.94%.

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Nigerian Pension funds, 2019 pension fund performance ranking

The high-interest regime that characterized the Nigerian market in the early to the end of 2019 seems to have paid off, as many pension funds in Nigeria recorded impressive performances in the year.

Irrespective of the poor scorecard of the Nigerian stock market in 2019, the Nigerian pension funds continued their winning streak, having been shielded by the over-allocation of their assets to the fixed income instruments of the market.

The Retirement Savings Account, RSA, category made an average of 13%, with returns ranging from 19.38% to 6.94%. Information about the performances of AXA Pensions RSA and Crusader Pension RSA were not available and efforts to get such information yielded no result. Those are therefore excluded in this report. Below are the 5 best performing RSA funds as at the end of 2019.

Nigerian Pension funds, 2019 pension fund performance ranking

Best Performing Fund

  • Name of Fund: APT Pensions RSA Pension Fund 2
  • YTD Performance %:  19.38%
  • YTD Gain per unit:  N0.54

Second Best Performing Fund

  • Name of Fund: AIICO Pensions RSA fund 2
  • YTD Performance %:  16.45%
  • YTD Gain per unit:  N0.52

3rd Best Performing Fund

  • Name of Fund: Premium Pensions RSA Fund 2
  • YTD Performance %:  15.95%
  • YTD Gain per unit:  N0.65

4th Best Performing Fund

  • Name of Fund: Fidelity Pensions RSA Fund 2
  • YTD Performance %:  15.17%
  • YTD Gain per unit:  N0.43

5th Best Performing Fund

  • Name of Fund: Investment One Pensions RSA Fund 2
  • YTD Performance %:  14.78%
  • YTD Gain per unit:  N0.37

[READ MORE: This is how much Federal Government borrowed from Pension Funds in 2019)

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Retiree Fund Performance

Retiree Pension Funds, otherwise known as fund 4, performed slightly less than the RSA funds, for the first time since I started tracking pension funds in Nigeria over 5 years ago. This may not be unconnected with the falling interest rate trend that was the hallmark of the fourth quarter of the year, as Retiree funds have greater exposure to fixed income securities.

On average, however, Retiree funds did better than RSA funds, generating an average return of 13.63% in 2019. The returns, which ranged from 18.5% to 9.34%, have Veritas Glanvills (VG) Retiree fund taking the lead. Again, AXA Mansard and Crusader Retiree Pensions funds are excluded from the analysis for lack of data.

Pension Funds Performance

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Here are the best 5 Retiree funds

Best Performing Fund

  • Name of Fund: Veritas Glanvills Pension Retiree Fund 4
  • YTD Performance %:  18.50%
  • YTD Gain per unit:  N0.56

Second Best Performing Fund

  • Name of Fund: Investment One Pensions Retiree fund 4
  • YTD Performance %:  17.02%
  • YTD Gain per unit:  N0.37

3rd Best Performing Fund

  • Name of Fund: Fidelity Pensions Retiree Fund 4
  • YTD Performance %:  17.02%
  • YTD Gain per unit:  N0.48

4th Best Performing Fund

  • Name of Fund: APT Pensions Retiree Fund 4
  • YTD Performance %:  15.75%
  • YTD Gain per unit:  N0.48

5th Best Performing Fund

  • Name of Fund: AIICO Pensions Retiree Fund 4
  • YTD Performance %:  15.72%
  • YTD Gain per unit:  N0.49

[READ MORE: Pension funds managers are really going to struggle in 2020 – Sigma Pensions CEO)

NSE Pensions Index Performance

Compared to the NSE Pensions Index, which is predominantly equity-based, both RSA and Retiree funds outperformed the index. The YTD performance of the index stood at minus 12.7%, meaning that all the funds beat the index with double-digit outperformance. Pension fund investors should not wallow in the euphoria of beating the index so badly, because I sincerely believe that the NSE Pensions Index is not a good benchmark for measuring the performance of pension funds.

It is very much akin to comparing apples to oranges. The NSE Pensions Index is an equity-based index, while the pension funds, be it RSA or Retiree, are fixed income-based funds; they are not the same in both components and strategy. Both the Stock Exchange, the Security and Exchange Commission and the Pension Commission should do Nigerian pension fund investors and analysts favour and come up with an index that is worthy of a pension fund industry that is worth over N10 trillion.

Until that happens, pension fund investors will continue to be deluded in the “fact” that their funds are beating the market.

In spite of lack of a better benchmark, pension fund managers in Nigeria have been doing great, both in performance and transparency.

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Uchenna Ndimele is the President of Quantitative Financial Analytics Ltd. MutualfundsAfrica.com and mutualfundsnigeria.com (both Quantitative Financial Analytics company website) is a leader in supplying mutual fund information, analysis, and commentary on African mutual funds. We provide reliable fund data; and ratings information that will add value to fund managers, the media, individual investors and investment clubs.

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Funds Management

Nigerians can now invest in more mutual funds

The coming year(s) may see more fund managers joining in the quest to explore and expand the Nigerian mutual fund space.

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Nigeria’s Fund Industry Remain Resilient Amid COVID 19 Concerns

Mutual funds in Nigeria have been increasing both in popularity, assets under management (AUM), as well as in numbers. Though not all the mutual funds in the country are published, the SEC Net Asset Summary Report has been acting as a barometer on which to gauge or measure the health of the industry.

Compared to other countries, mutual funds as an investible asset class is relatively new in Nigeria. In spite of its newness, the number of funds has grown from 1 in 1991 to 110 as of October 16th, 2020.

12 new mutual funds made it to the list out of this number. They include the following Alpha Etf, Anchoria Equity Fund, Anchoria Fixed Income Fund, Anchoria Money Market Fund, ARM Eurobond Fund, ARM Fixed Income Fund, Cordros Dollar Fund, FAAM Money Market Fund, FBN Nigeria Halal Fund, AVA GAM Fixed Income Dollar Fund, Trustbanc Money Market Fund, and Afrinvest Dollar Fund.

Just like the number of mutual funds in Nigeria increases, so has the asset under management or net asset value of mutual funds. As of October 16th, 2020, the total asset value of Nigeria mutual funds stood at N1.54 trillion or $4.05 billion when converted at a rate of N380/$.

What you should know

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In the same vein, the number of fund managers also increased, although the increase is not as much as that of the number of mutual funds. So far in 2020, 4 fund managers joined the league of mutual fund managers in Nigeria. The new additions are:

  • First Ally Asset Management Limited, which oversees the FAAM Money Market Fund with N718 million in assets under management.
  • The next newcomer fund manager is Trustbanc Asset Management Limited whose only fund – Trustbanc Money Market Fund, has added N98 million to Nigeria’s total mutual fund asset value as of October 16, 2020.
  • Anchoria Asset Management Limited currently has three mutual funds under its management – Anchoria Equity, Anchoria Fixed Income, and Anchoria Money Market funds, with a combined asset under management of N1.156 billion.
  • Lastly, AVA Global Asset Management Limited has one fund – AVA GAM Fixed Income Fund, with an AUM of N523.8 million under its management.

Bottomline

This is indeed a good development because when compared with the same period in 2019; only one fund manager, Growth and Development Asset Management Limited (GDL) was added to the list with its GDL Money Market Fund.

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More additions are not expected this year but the coming year(s) may see more fund managers joining in the quest to explore and expand the Nigerian mutual fund space.

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Funds Management

PenCom okays N2.58billion for relatives of 591 deceased workers in three months

PenCom has released N2.58billion for payment of pension benefits of deceased workers.

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Pencom, pension, Nigeria’s Pension Asset increased by N228 billion in October, PFAs increase investment in infrastructure to N40.52 billion   

The National Pension Commission  (PenCom) has released N2.58billion for payment of pension benefits of 591 deceased workers under the Contributory Pension Scheme in the second quarter 2020.

This was disclosed in the commission’s second-quarter 2020 report.

READ: PenCom should pay 50% of workers’ pension at retirement – TUC

According to the report, the beneficiaries included 288 from the Federal Government sector, 135 from State Government sector and 168 from the private sector, making a total of 591 relatives.

It read, “The commission approved the payment of N2.58bn as death benefits to the beneficiaries of the 591 deceased employees during the quarter under review.”

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READ: PenCom recovers N17.51billion from defaulting employers, imposes penalties

PenCom also said that during the quarter under review, the Pension Fund Administrators recaptured 56,990 Retirement Savings Account holders and uploaded their data on the Enhanced Contributory Registration System.

It stated that the Enhanced Contributor Registration System, which was deployed in June 2019, had provided a platform for addressing various issues identified with the Contributor Registration System.

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READ: How foreign exchange risks and others affect the Nigerian pension industry 

It said the PFAs under the assistance of Pension Operators Association had commenced the implementation of a shared service approach in order to speed up the data recapture exercise.

The commission said it generated a total number of 190 employer codes in the period under review using the ECRS.

READ: FUGAZ Banks suffer N1.9 trillion in CRR Debits in Q2

Over 92% of employer codes generated were for private sector companies, including about seven per cent for small businesses, it stated.

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Funds Management

Best performing Mutual Funds in September 

Nairametrics reviews the best Mutual Funds in August, judging by their performance.

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Best Mutual Funds in Nigeria

Mutual Funds are professionally managed investment schemes that are controlled by designated Asset Management Companies (AMC). These Funds allow investors the opportunity to invest in stocks, bonds, and securities. They are particularly good for passive investors.

According to data from the Security and Exchange Commission (SEC), Nigeria currently has about 112 Mutual Funds as of October 2nd, 2020. These Mutual Funds cut across several Fund Types. Here is a breakdown of the Fund Types available for investors according to SEC.

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These are the top 5 performing funds. We also included profiles of the Funds as described on their websites. To determine the best performing Funds in the month of September, we looked at the Fund Prices as of August 2020 and compared to the fund prices as of 2nd October, as released by the Securities and Exchange Commission (SEC).


Vantage Balanced Fund – Investment One Funds Management Limited

The Vantage Balanced Fund (VBF), formerly known as Nigerian International Growth Fund is a balanced Mutual Fund, was created to maximize long-term capital growth and maintain regular income distribution.

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The Fund is invested in Equities, Fixed Income and Money Market Instruments, and Real Estate investments. The primary objective of the Fund is long-term capital appreciation, which is achieved by investing not more than 70% of the Fund’s assets in the equities of blue-chip companies listed on the Nigerian Stock Exchange.

August 28th 

Fund Price – N2.17

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October 2nd

Fund Price – N2.41

Return – 11.06%

Ranking – First

 

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Commentary: VBF is a Mixed Fund by Investment One Funds Management Limited. It is the best performing fund in the month of September, growing by 11.06%. The net asset value stood at N1.71 billion as of 2nd October.

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Anchoria Equity Fund – Anchoria Asset Management Limited

The Anchoria Equity Fund is an open-ended fund. It is a collective investment scheme, which seeks to invest primarily in quoted equities (minimum of 75%) and fixed income securities (maximum of 25%). The Fund does not invest in unquoted equity securities. The Fund employs an asset mix strategy with the aim of achieving consistent growth, by seeking significant exposure to a diversified pool of investment-grade equities and fixed income securities.

In order to ensure sound investment selection, portfolio, and risk management practices, the Fund adopts a portfolio strategy that largely depends on fundamental and technical analysis in order to properly assess the inherent risks within the context of the Fund profile. Accordingly, the Fund holds long term quoted equity positions with strong fundamentals underpinned by good economic themes, that are attractively priced relative to their true value and prospects.

August 28th 

Fund Price – N99.33

October 2nd 

Fund Price – N107.87

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Return – 8.60%

Ranking – Second

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Commentary: This is an Equity Based Fund by Anchoria Asset Management Limited. For a fund that is predominantly focused on equities, this is a pretty much impressive performance by all standards. It grew by 8.60% in the month of September. The net asset value stood at N313.78 million as of 2nd October.


Paramount Equity Fund – Chapel Hill Denham Mgt. Limited

The Paramount Equity Fund is Nigeria’s oldest mutual fund which invests in a broad range of high-quality equities and fixed income securities. The Fund seeks to provide an investment vehicle that enables unitholders to achieve consistent capital appreciation and some income over the long term. The Fund is suitable for investors who seek high capital growth and have a high-risk appetite. Investors are also expected to have medium to long term investment horizon.

August 28th 

Fund Price – N11.54

October 2nd 

Fund Price – N12.52

Return – 8.49%

Ranking – Third

Commentary: This is an Equity Based Fund by Chapel Hill Denham Management Limited. The Fund grew by 8.49% in the month of September. The performance is impressive considering that it is predominantly focused on equities. The net asset value stood at N425.28 million as of 2nd October.  


VI ETF – Vetiva Fund Management Limited

The Vetiva Industrial ETF “VETIND ETF” is an open-ended Exchange Traded Fund managed by Vetiva Fund Managers Limited. The VETIND ETF is designed to track the performance of the constituent companies of the NSE Industrial Index and replicate the price and yield performance of the Index.
The NSE Industrial Index comprises of the top 10 companies in the Industrial sector listed on the Nigerian Stock Exchange (NSE), in terms of market capitalization and liquidity and is a price index weighted by adjusted market capitalization.

August 28th 

Fund Price – N11.19

October 2nd 

Fund Price – N12.00

Return – 7.24%

Ranking – Fourth

Commentary: The VI ETF by Vetiva Fund Management is the best performing Exchange Traded Fund in the month of September. It grew by 7.24% in the review month. The net asset value stood at N126.32 million as of 2nd October. 


VCG ETF – Vetiva Fund Managers

The Vetiva Consumer ETF “VETGOODS ETF” (launched in 2015), is an open-ended Exchange Traded Fund managed by Vetiva Fund Managers Limited. The VETGOODS ETF is designed to track the performance of the constituent companies of the NSE Consumer Goods Index and to replicate the price and yield performance of the Index.

The NSE Consumer Goods comprises the top 15 companies in the Food/Beverages and Tobacco sector listed on the Nigerian Stock Exchange (NSE), in terms of market capitalization and liquidity, and is a price Index weighted by adjusted market capitalization.

August 28th 

Fund Price – N4.27

October 2nd 

Fund Price – N4.57

Return – 7.03%

Ranking – Fifth

Commentary: This is another of Vetiva’s products, and it is one of the best Exchange Traded Funds based on September performance, growing by 7.03%. VCG EFT Funds are a great source of investment, and it is not surprising to see another in the top 5 rankings. The net asset value stood at N117.36 million as of 2nd October. 


Bubbling Under: The following Funds make up the rest of the top 10 on our list in descending order.

6.VG 30 ETF – Vetiva Fund Managers Limited (Exchange Traded Funds)

Return – 6.64%.

7. ACAP Canary Growth Fund – Alternative Cap. Partners Limited (Mixed Funds)

Return – 6.22%.

8.VETBANK ETF – Vetiva Fund Managers Limited (Exchange Traded Funds)

Return – 5.80%.

9. AIICO Balanced Fund – AIICO Capital Ltd (Mixed Funds)

Return – 5.75%.

10. Frontier Fund – SCM Capital Limited (Equity Based Funds)

Return – 5.34%.


NB: The figures are based on SEC weekly performance report 

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